Correlation Between FPT Digital and South Basic
Can any of the company-specific risk be diversified away by investing in both FPT Digital and South Basic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FPT Digital and South Basic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FPT Digital Retail and South Basic Chemicals, you can compare the effects of market volatilities on FPT Digital and South Basic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FPT Digital with a short position of South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPT Digital and South Basic.
Diversification Opportunities for FPT Digital and South Basic
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FPT and South is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FPT Digital Retail and South Basic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Basic Chemicals and FPT Digital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FPT Digital Retail are associated (or correlated) with South Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Basic Chemicals has no effect on the direction of FPT Digital i.e., FPT Digital and South Basic go up and down completely randomly.
Pair Corralation between FPT Digital and South Basic
Assuming the 90 days trading horizon FPT Digital Retail is expected to generate 1.07 times more return on investment than South Basic. However, FPT Digital is 1.07 times more volatile than South Basic Chemicals. It trades about 0.41 of its potential returns per unit of risk. South Basic Chemicals is currently generating about -0.17 per unit of risk. If you would invest 18,600,000 in FPT Digital Retail on November 7, 2024 and sell it today you would earn a total of 2,000,000 from holding FPT Digital Retail or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FPT Digital Retail vs. South Basic Chemicals
Performance |
| Timeline |
| FPT Digital Retail |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| South Basic Chemicals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
FPT Digital and South Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FPT Digital and South Basic
The main advantage of trading using opposite FPT Digital and South Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FPT Digital position performs unexpectedly, South Basic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in South Basic will offset losses from the drop in South Basic's long position.| FPT Digital vs. Vietnam Technological And | FPT Digital vs. Transport and Industry | FPT Digital vs. HUD1 Investment and | FPT Digital vs. HVC Investment and |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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